HONG KONG: ‘Zero Tolerance’ For Listco Irregularities

(13-10-2011, 05:57 PM)Qiaofeng Wrote:

(13-10-2011, 04:05 PM)karlmarx Wrote: sph's management shares do not confer access to a monopoly; it is the newspaper and printing presses act that does so. having a stable income stream does not necessarily give sph an unfair competitive edge in the property business. of course, having more resources is certainly helpful, which in such a case, there are companies with even more resources than sph.

Let's assume this fictitious scenario.
In its effort to diversify. Say SPH sets up SPHLand and SPH Conventions and becomes a conglo with 3 arms : SPH Press, SPHLand & SPH Conventions.
Now, lets focus on SPHLand, say in the next few tenders for land, SPH Land tenders many bids, way above others to land prime locations such as in Clementi Mall.
What happens then is that U have suddenly another strong competitor taking on the likes of Capland, Kepland, CDL, UOL.
How would the likes of these companies react when SPHLand starts dominating the markets with high bids and in the process muscle into their domains?

SPH has a dual-class share structure, the management shares, held by various entities such as Great Eastern, OCBC, NTUC Income, SingTel, DBS, UOB, NUS and F&N; make it possible for IPTs such as between SPH and NTUC Income for Clementi Mall.
So such special voting powers confer certain privileges to these select group of people!! Banking regulations forbid the banks from profiting and NUS probably dun have such ambitions. But if NTUC Income or say FNN continues to partner SPHLand and dominate bidding, say; then other developers will surely not be happy.

The amended Press Act gives SPH the monopoly status in the Printed press media biz. The management shares allow certain select few to control the decision making process; if they choose to i.e. management control of the monopoly.
see pg 169
http://www.sph.com.sg/pdf/annualreport/2...R_2010.pdf

The point is not about a stable income stream. It is that the Press Act has been made use of as an enabler to dominate another biz which it was not legislated for; tantamount to a possible "misuse".

So in essence the Press Act allows SPHLand (a proxy of certain parties) to get access to funds generated by SPHPress to outbid other developers.

This is all fictitious.....but if fits well into the discussion topic of Listco. U could have a non listedco, by proxy making use of a listco to dominate certain bizs.

Legislation (well intended or not) can have loopholes and unintended effects.

My 1c Gibberish

yes, the big players will most certainly be upset should sph trespass their turf. but who really benefits from sph's foray into property?

management shares make up only 2% of the total shareholding. the dividends paid out from sph to GE, OCBC, NTUC, singtel, DBS, et al. is negligible compared to what these blue chip can earn on their own. the purpose of the management shares is not for the parties holding these shares to partake in the profits of sph, but rather for absolute control.

is sph abusing its newspaper monopoly business to aggressively compete with other property players?

i don't think it has come to this, quite far from it. and i'm sure sph's management is aware of such possible backlashes. sph still continues to pay out most of its earnings as dividends, instead of buying up properties/land. with its earning power, sph could buy an office block every 2 years.

(13-10-2011, 06:52 PM)karlmarx Wrote: yes, the big players will most certainly be upset should sph trespass their turf. but who really benefits from sph's foray into property?

management shares make up only 2% of the total shareholding. the dividends paid out from sph to GE, OCBC, NTUC, singtel, DBS, et al. is negligible compared to what these blue chip can earn on their own. the purpose of the management shares is not for the parties holding these shares to partake in the profits of sph, but rather for absolute control.

is sph abusing its newspaper monopoly business to aggressively compete with other property players?

i don't think it has come to this, quite far from it. and i'm sure sph's management is aware of such possible backlashes. sph still continues to pay out most of its earnings as dividends, instead of buying up properties/land. with its earning power, sph could buy an office block every 2 years.

The point is NOT about SPH making profit and giving out that profit as dividends; which we all love and is the primary reason why SPH is a blue chip divd share.

The discussion, I guess we have veered; is about legislation/regulation to have dual class shares for certain listedcos and whether they do serve their intended purpose.

As U pointed out management share is just 2% with 200X weightage, so we have 800m total shares, but the management has voting shares equal to 3260m shares, they will out-vote the common votes.

Take NTUC Income, by owning just a stake of 0.32% (with disproportionate almost 16% voting power) of SPH shares, they have gotten a IPT (Interested Party Transaction) in which together with Fairprice they own and control 40% of Clementi Mall and thru SPH, a 16% say thru management control of SPH voting.
One could argue that there were synergies and mutual benefits, but this is a potential loophole which could be exploited?

If U read my earlier posts, My 1c take is that this would ironically, curb SPH diversification ambitions, becos of SPH's fear of others crying afoul.......much to the detriment of SPH's desire to diversify!!

But, IMHO, this is exactly what SPH as a biz should do. Go out and compete agressively in the 3 areas-- property, conventions and media biz. "sph could buy an office block every 2 years" but will likely not!!

So the legislation (dual class ownership) do help in giving management absolute control but may not help in the biz diversification process that SPH badly needs to do now.

My 1c Gibberish